IMF loan approval to boost markets

IMF loan approval to boost markets

Dadan Wijaksana, The Jakarta Post, Jakarta

The recent loan approval from the International Monetary Fund
(IMF) would likely extend the rupiah and the stock market's
bullish trend for yet another week, analysts said.

Last Friday, the IMF approved the disbursement of loans worth
US$347 million to Indonesia, saying the country deserved
continued support from the international community.

The deal marked the second vote of confidence in one month
after creditor nations grouped in the Paris Club agreed to
reschedule Indonesia's $5.4 billion in debts.

While the IMF's approval was widely expected, analysts said it
would still help keep market sentiment firm in the short term.

The rupiah might test 9,200 against the U.S. dollar this week,
said Wiwan Wiradjaja, an analyst at DBS Vickers.

"The rupiah will likely go stronger on the goods from the
IMF," Wiwan told The Jakarta Post over the weekend.

Last week, the local unit closed a nod higher at 9,300 against
the dollar from 9,345 a week before.

Earlier this month, the rupiah got a strong push from the
Paris Club deal.

Creditor countries agreed to defer US$5.4 billion in debts
maturing in Dec. 2003 by at least another 20 years.

While the IMF loan approval means more dollar will flush the
market, the Paris Club deal means less demand for the dollar.

Wiwan said that market confidence was running high of the
government securing a similar debt rescheduling deal from the
London Club.

The Paris Club creditor countries demanded Indonesia seek
equal treatment for its sovereign debts to private lenders under
the London Club.

Finance minister Boediono has said Indonesia would seek to
reschedule $340 million in debts maturing in the period until
Dec. 2003.

The meeting with the London Club is scheduled for next month.

A dealer at a local brokerage said there was more room for the
rupiah to gain if the government was consistent in its reforms.

Crucial, he said, was progress in its privatization program,
and the divestment of banks under the Indonesian Bank
Restructuring Agency (IBRA) -- reforms that are most likely to
attract more dollar inflows.

"If the government continues its progress in these areas, and
if seasonal boosts like the IMF loan approval or a London Club
deal keep coming, I think the rupiah will maintain its upward
trend," the dealer said.

Over the past four months, the rupiah has gained by around 10
percent against the dollar. He expected the local unit to trade
at between 9,200 and 9,400 this week.

In the same period, the Jakarta Stock Exchange (JSX) Composite
Index has surged by almost 40 percent.

Stock analyst from Sigma Research Jasso Winarto predicted
another 2 percent gain in this week's trading.

He said foreign investment would continue to boost the local
market, this time around on a slew of good corporate news.

This week marked the deadline for publicly listed companies to
release their financial statements, many of which Jasso expected
would turn out to be positive.

"We expect good figures from these reports. And this will
drive the index higher," he said.

The JSX index closed the week up 1.3 percent at 539.963 points
as against 532.78 the previous week.

Daily volume averaged 1.34 billion shares valued at Rp 676.8
billion ($72.77 million) compared to the previous week's 2.4
billion shares valued at Rp1.16 trillion.